Skip to main content

%1

Britain to Consider Bolstering Consumer Protection in Retail Bankruptcies

Submitted by ckanon@abi.org on
Britain will launch a consultation to establish ways to better protect consumers when retailers suffer insolvency and customers have pre-paid for goods, Reuters reported. Under existing rules, if a company becomes insolvent, goods paid for in advance that are still in its possession may be considered as assets belonging to the business. The consultation will set out ways of identifying the consumer as legal owner. The coronavirus crisis has put additional pressure on retailers as many consumers avoid shops and other businesses. Consumer Affairs Minister Paul Scully has asked the Law Commission to consult on draft legislation to update the law that establishes when consumers legally own goods for which they have pre-paid.
Article Tags
International Insolvency
Retail
Read more.

Ice Cream Sales Are Up With More People at Home but Deodorant Sales Are Down

Submitted by ckanon@abi.org on
You're going out less and spending more time at home, which can mean only one thing: you don't need to wear deodorant as often, CNN reported. With social distancing in full effect and people being forced to quarantine due to the pandemic, fewer people are going into offices to work or out to socialize. This has led to fewer people grabbing that stick of deodorant to roll on before going out and more people lounging at home watching Netflix with a tub of ice cream in hand. Unilever said on that demand for personal care items have slumped. The company, which owns brands such as Dove soap and Axe deodorant, said that the lockdowns have led to the decline in sales. It hasn't been all bad for Unilever, though. The company owns ice cream brands such as Breyer's, Ben & Jerry's and Magnum, and ice cream sales at home are up as people consume more food at home. "Consumers have eaten more soups, used more meal kits and accompanied their meals with mayonnaise and ice cream as dessert," Unilever CEO Alan Jope said. Sales of ice cream people consumed at home increased by 15% in the first half of the year, and sales are even higher at 26% between April and June.
Article Tags
Consumer Debt
Retail
Read more.

Brooks Brothers Starts Takeover Race with Sparc’s ‘Stalking-Horse’ Bid

Submitted by ckanon@abi.org on
Brooks Brothers Inc. reached a deal with Sparc Group LLC — the venture created by Authentic Brands Group LLC and mall owner Simon Property Group Inc. — to sell the company for $305 million, The Wall Street Journal reported. Sparc’s offer will be subject to higher and better bids due by Aug. 5 and has been designated as the “stalking horse.” The company has set a deadline of Aug. 11 to complete a sale to a buyer. Sparc has also committed to keeping 125 of the company’s stores open. WHP Global Inc. is also preparing a bid for Brooks Brothers. Both Sparc and WHP Global have been expected to come forward to bid for Brooks Brothers. The two firms competed with each other to provide a bankruptcy loan to the retailer, a competition which Sparc won, with a $80 million loan. A third suitor has emerged since the iconic American company filed for bankruptcy. Milan-based Giglio Group SpA, which helps fashion companies improve online sales, is spearheading a group of investors who are interested in buying the company and turning it into an online-only retailer. If successful, Giglio plans to install Italian managers with fashion-industry experience and close stores to free up funds to invest in digital. Brooks Brothers’ three U.S. factories, which are slated to close next month, would remain open and overseas production would be consolidated in Italy.
Article Tags
Covid19
Retail
Read more.

Ann Taylor Parent Ascena Files for Bankruptcy as Pandemic Crushes Already Troubled Retailer

Submitted by ckanon@abi.org on
Ascena Retail Group Inc., parent of the Ann Taylor and Loft retail chains, filed for voluntary chapter 11, with a restructuring agreement supported by more than 68% of its secured term lenders, crushed by the effects of the coronavirus pandemic on its already troubled business, MarketWatch reported. The Mahwah, N.J.-based company said that it expects to reduce debt by about $1 billion in its pre-arranged restructuring, providing increased financial flexibility to become profitable. Ann Taylor, Loft, Lane Bryant and other chains will continue to operate through the restructuring with about 95% of stores open. But the company will reduce its footprint by closing a significant number of Justice stores and certain Ann Taylor, LOFT, Lane Bryant and Lou & Grey stores. Ascena has $150 million in funding from existing lenders and expects that sum combined with cash flow generated by ongoing operations and cash on hand to be sufficient to meet its needs.
Article Tags
Covid19
Retail
Read more.

Mall Owner CBL Prepares to File for Bankruptcy Protection

Submitted by ckanon@abi.org on
CBL & Associates Properties Inc., the owner of more than 100 shopping malls across the U.S., is preparing to file for bankruptcy, according to people with knowledge of the plans, Bloomberg reported. The company has been negotiating with its lenders in an effort to enter chapter 11 with a consensual restructuring agreement in place. The plans aren’t final, and elements could change. CBL, which operates mostly so-called Class B malls, has been hurt in part by struggles of retailers including Dick’s Sporting Goods Inc. and Ascena Retail Group Inc., among the landlord’s top tenants based on revenue at the end of 2019. CBL’s own financial distress shows the impact of retail-sector failures, which have come fast and furious in recent years. Shares of Chattanooga, Tenn.-based CBL plunged 11 percent after Bloomberg reported the bankruptcy preparations, and dropped an additional 18 percent. The mall owner said in June that the loss of income from stores withholding rent during the COVID-19 pandemic had forced it to skip an interest payment due on some of its more than $3 billion debt. It has a forbearance agreement with debt-holders that was extended until July 22. CBL bonds maturing in 2023 last traded around 25 cents on the dollar.
Article Tags
Real Estate
Retail
Read more.

A Risky Bet by America’s Mall Owners: Plucking Retailers Out of Bankruptcy to Salvage a Pandemic-Hit Industry

Submitted by ckanon@abi.org on
Dozens of retailers, some of them the lifeblood of America's shopping malls, have been pushed to the brink and filed for bankruptcy during the coronavirus pandemic, CNBC reported. Apparel brands like J.Crew, Brooks Brothers and New York & Co. parent company RTW Retailwinds. Department store chains Neiman Marcus, J.C. Penney and Stage Stores. The health chain GNC. The kitchen supplies company Sur la Table. The list goes on. And there are more coming. Now, it's some of America's biggest mall owners that are increasingly looking to do deals to salvage them. In many instances, as it plays out, these bankrupt retailers are major tenants in malls, with sprawling store counts. Meanwhile, some of the biggest retail real estate owners in the country, like Simon Property Group, are sitting on cash. A lot of it. On June 29, in an investor update, Simon said it had roughly $8.5 billion of liquidity on its balance sheet, including about $3.5 billion of cash on hand. It issued another $2 billion in senior secured notes on July 7. In one of its latest deals, Simon, which is the biggest U.S. mall owner by the number of malls it operates, has teamed up with the apparel-licensing firm Authentic Brands Group to supply financing to carry Brooks Brothers through bankruptcy.
Article Tags
Retail
Read more.

Neiman Marcus Executives Seek $10 million in Bonuses During Bankruptcy

Submitted by ckanon@abi.org on
Neiman Marcus is asking a federal bankruptcy court in Texas to allow almost $10 million in pay raises for CEO Geoffroy van Raemdonck and seven other executives as the company goes through debt restructuring, CBS News reported. The proposed compensation plan covers staff who are "critical to day-to-day operations" and Neiman Marcus' financial success during the bankruptcy process, according to a court filing. Neiman Marcus filed for bankruptcy protection in May after the coronavirus closed its stores. The Dallas-based clothing and department store was already preparing for a court-led reorganization of its $5 billion of debt. As part of the bankruptcy filing, Neiman Marcus said that it has secured $675 million in financing from a majority of creditors to keep operating during the restructuring. Those creditors now hold over two-thirds of the company's debt. The company said it is evaluating locations, but did not specify if it would close any stores. The pay raise plan goes against the typical timeline major companies follow during bankruptcy plans. Neiman Marcus employs about 13,200 employees, including 9,545 full-time and 3,655 part-time. Along with eight named executives, the compensation plan covers 17 senior vice presidents, 82 vice presidents, 40 directors and up to 100 additional key employees identified by the CEO as eligible. The group has seen "a substantial increase in their workloads without any concomitant increase in their compensation," the company said in the filing.
Article Tags
Retail
Read more.

Old Time Pottery Files for Chapter 11

Submitted by ckanon@abi.org on
Home decor retailer Old Time Pottery has filed for protection from its creditors as it seeks to recover from the impact of COVID-19, Nashville (Tenn.) Post reported. Murfreesboro-based Old Time Pottery runs 43 stores and employs about 800 people. The company’s chapter 11 filing late last month came 10 years after it emerged from a previous reorganization that involved closing seven of the 36 stores it operated at the time. This time, its executives are planning to close four stores in Illinois, Florida and the Carolinas, and possibly others as they try to ride out the drop in sales caused by the pandemic. Old Time Pottery is securing $32.3 million in debtor-in-possession financing from Second Avenue Capital Partners. That money will go toward paying off debt held by PNC Bank, Old Time Pottery’s lender since 2014. 
Article Tags
Covid19
Retail
Read more.

Chuck E. Cheese Bondholders Say Lenders Wield Too Much Power

Submitted by jhartgen@abi.org on

Bondholders accused the bankrupt parent company of the Chuck E. Cheese children’s entertainment chain of trying to give too much control over its restructuring strategy to top lenders while scuttling a potentially superior alternative made by the bondholders, WSJ Pro Bankruptcy reported. In papers filed yesterday with the U.S. Bankruptcy Court in Houston, a group of unsecured bondholders led by Prudential Financial Inc. objected to the company’s request to spend its cash on hand and criticized several concessions demanded by secured lenders in exchange for their permission to use that cash. CEC Entertainment Inc., the parent of 741 Chuck E. Cheese and Peter Piper Pizza stores, filed for bankruptcy last month as the coronavirus pandemic shook its family-friendly business model. The company’s request for a final green light comes with provisions that would put the lenders in position to thwart any restructuring strategy that didn’t suit them, according to the bondholders’ objection. The bondholders said negotiations with the company shouldn’t be impeded by leverage grabs by lenders looking to take control of the business. CEC hasn’t outlined a clear path to exiting bankruptcy or proposed restructuring terms with either its lenders or bondholders.

Article Tags
Corporate Governance
Court Administration
Creditors' Committee
Business Reorganization
Covid19
Retail
Read more.
Subscribe to %1